PayPal Announces $4 Billion Acquisition Of Honey

PayPal, the online payments company, has announced its most significant attempt to date to evolve its current offerings beyond its core payments business model. The San Jose-based company is purchasing Honey, the e-commerce company, for a reported $4 billion.

Largest Purchase

The acquisition is the largest in the history of PayPal. The online payments company disrupted the payments industry with its launch back in 1998 but is now looking to cement its business position by expanding its offerings to consumers and merchants.

The deal with Honey will enable the company to gain new streams of data and insights into consumer purchasing habits, providing a new source of information to expand their range of services to consumers and merchants.

The announced takeover deal comes during a year where PayPal finds itself facing new competitors in the online payments industry, with the giants Apple and Google announcing forays into the industry.

Price Tracking

Honey offers consumers online tools to keep track of product and service prices, and to automatically apply available coupons and codes to their online purchases. With the announcement of the deal, PayPal revealed that they would be extending the service from Honey’s 17 million users to the 300 million users that currently use PayPal’s payment network.

PayPal will also extend Honey’s services to the 24 million merchants that currently accept payment through PayPal’s network. These services include the capabilities to target consumers that create lists of products they wish to purchase with highly personalized marketing messaging.

Expand Throughout Process

PayPal chief executive Dan Schulman stated that the acquisition of Honey would help the payments company expand their reach throughout the whole shopping process, rather than the current business model that restricts PayPal’s coverage to the checkout process.

The $4 billion deal is the largest in history for a Los Angeles-based venture capital-backed company. Honey was established in Los Angeles back in 2012. The e-commerce company has seen revenues double in the last year to reach $100 million and return a profit.

PayPal will pay for the deal using existing cash reserves. After the announcement of the Honey acquisition, PayPal shares dropped 2% in after-market trading.